Towards a New Understanding of Flexicurity: State of The Art

By attempting to reconcile strong demands for greater flexibility, due to competitiveness concerns, with equally strong demands for employee protection, the notion of flexicurity has stimulated a great deal of interest in both academia and the policy community. The European Union has also embraced the formula and placed it at the core of the European Employment Strategy. Significantly, with a communication entitled ‘Towards Common Principles of Flexibility: More and better jobs through flexibility and security’ (European Commission, 2007) the Commission identified four major flexicurity pathways to address flexibility and security in different national contexts:

1. Flexible and reliable contractual arrangements: through modern labour laws, collective agreements and work organisation;

2. Comprehensive lifelong learning strategies: to ensure the continual adaptability and employability of workers, especially the more vulnerable;

3. Effective active labour market policies: that help people cope with rapid change, reduce unemployment spells and ease transitions to new jobs;

4. Modern social security systems: that provide adequate income support, encourage employment and facilitate labour market mobility. This includes the coverage of social protections provisions that help people to combine work and private life.

All these flexicurity pathways rely upon the interplay between two fundamental sources of labour market regulation: labour law and social welfare (Heyes, 2013). The literature on flexicurity suggests that it is thanks to the reduction of legal protections that it is possible to promote labour mobility – both in the external and internal labour market – thereby contributing to this dimension of flexibility. Meanwhile, it is the social security system that provides compensatory safety nets for the unemployed, as well as active labour market policies, thereby contributing to this dimension of security (European Commission, 2007). It follows, first, that depending on the way in which national level institutions interact, different degrees of flexicurity may be reached in different countries (Bekker and Wilthagen, 2008). Second, the interface between labour law and welfare state is likely to shape the focus of another important source of labour market regulation – namely collective bargaining (see 2.4).

Because of their supportive and productive social dialogue between social partners and public authorities, some countries have been regarded as flexicurity models (European Commission, 2009). Notably, the satisfactory economic and labour market performance of Denmark and the Netherlands seemed to suggest that labour markets can be made more dynamic without compromising social protections (Ibid.). However, the European Commission has refrained from indicating any best-way solution to achieve flexicurity (European Commission, 2007). Member States are encouraged to explore overlaps between policy fields and seek where possible balance between flexibility and security strategies and outcomes (Burroni and Keune, 2011). As a result, flexicurity has become a sort of ‘magic formula’ to indicate any attempt to reconcile market based strategies with policies of social solidarity (Pedersini, 2009).

Scholars have recently demonstrated that this ‘vague’ (Rogowski, 2008), ‘ambiguous’ (Jørgensen and Madsen, 2007) and ‘elusive’ (Heyes, 2011) policy agenda has far from delivered what it promised. In this regard, by observing the OECD’s employment protection indicators in different countries, Heyes (2011) draws three fundamental conclusions:

1. First, there has not been a shift towards the pursuit of flexicurity. If on the one side, flexibility (as measured by the reduction in employment protections and the liberalisation of non-standard arrangements) has significantly increased, security on the other, has not improved.

2. With regard to their labour market policies, EU Member States have not converged towards flexicurity models. Countries have not increased their spending in unemployment benefits to imitate either Denmark or the Netherlands. If anything, Denmark and the Netherlands have become more similar to other Western European countries.

3. Despite a general weakening of security dimensions, cross-national differences persist in the strength of employment protections, labour market policies and support for the unemployed.

With a similar focus on national level policy interventions, Viebrock and Clasen (2009) argue that the conceptual versatility of flexicurity has certainly contributed to making its paradigm acceptable to a large number of political actors. Policymakers, however, have neglected the fact that for the strategy to be successful, flexibility and security need to be simultaneously achieved. They conclude that if the concept is not further specified for analytical purposes, it will be soon replaced by the ‘next fashionable and politically useful’ one (Viebrock and Clasen, 2009:325).

Burroni and Keune (2011) share similar doubts. Nevertheless, they suggest that before being entirely dismissed, this concept may deserve further investigation. Crucial to the focus of the analysis in this thesis, Burroni and Keune observe that the academic debate on flexicurity has mainly dealt with national level institutions, supposing that national labour markets have a high degree of homogeneity. Critically, they show that within the boundaries of the same country, sectors or enterprises differ significantly in dimensions such as exposure to international competition, degree of unionisation, or skill levels. As a result, the effects of

national flexicurity arrangements are likely to vary within countries and ‘among sectors, occupational groups, types of enterprise and regions’ (Burroni and Keune, 2011:85).

Furthermore, they observe that nation-states – via legal frameworks and public policy instruments – are not the only entities responsible for shaping regimes of market flexibility and protection against uncertainty. In their opinion, the virtually exclusive reliance on statutory provisions, which neglects other important sources of flexibility and security, has severely restricted flexicurity research:

The flexicurity approach should extend its scope to others factors that influence flexibility and security as well as the relationship between the two (Burroni and Keune, 2011:88).

Following up this argument, scholars have recently looked at other types of regulation – in addition to legal regulation and market regulation – as potentially responsible for flexibility and security balances (Ibsen and Mailand, 2011; Marginson and Galetto, 2015; Pulignano and Keune, 2015). Accordingly, their attention has focused on the most formal industrial relations institution, collective bargaining. By covering an intermediate position between the prevalent modes of labour market governance – the law and the market – and engaging in agreements enhancing employment and competitiveness, collective bargaining certainly represents a promising alternative to explore.

More specifically, this new stream of literature draws on Wilthagen (2004) who argues that flexicurity policies can be analysed as types of trade-offs (Wilthagen and Tros, 2004; Bekker and Wilthagen, 2008). Andersen and Mailand (2005) provide corroboration for this view by showing that sector level collective bargaining in Denmark does regulate issues that have actual and direct impact on flexibility and security. Comparative institutional analysis has, therefore, extended its remit to collective bargaining as a way of exploring the development of the issues of flexibility and security.

In this light, the most original contributions can be found in two recent studies by Ibsen and Mailand (2011) and Marginson and Galetto (2015) respectively, who investigate the ‘missing link between collective bargaining and flexicurity’ (Ibsen and Mailand, 2011:165). Their work explores the extent and the way in which a key subnational mode of labour market

governance – collective bargaining at the sector level – addresses issues of flexibility and security across different countries and industries. While Marginson and Galetto (2015) pay attention to the role of institutional configurations (which both enable and constrain local level negotiations on these issues) Ibsen and Mailand (2011) focus on the quality of flexicurity achieved and the power relations amongst actors.

Ibsen and Mailand (2011) confirm that collective bargaining offers significant policy arenas within which flexibility and security ‘balances’ can occur (Wilthagen and Tros, 2004; Bekker

et al, 2008). According to these authors, sector level agreements go by the logic that potential trade-offs between flexibility and security are compensated by side payments. For example, unions might accept the removal of job demarcations in an agreement which increases functional flexibility, but lowers employment security for members. Yet, in return, they will expect side-payments on social benefits or rights to education. Moreover, bargaining actors are closer than politicians to the challenges faced by employers and employees. This increases the opportunity for broader bargaining topics and fosters exchanges, package deals and joint problem-solving. They conclude that through social dialogue and collective bargaining social partners are likely to achieve flexibility and security simultaneously, as even faced with highly controversial issues, opposing each other they may identify an agenda in which both secure positive outcomes.

In keeping with these findings, the present thesis looks at sector level collective bargaining as an analytical starting point, assuming that companies and workers belonging to the same industry experience similar technologies and markets and, as a result, also similar demands for flexibility and security. However, it enlarges the debate to also examine the role that national level institutions, namely, labour law and the welfare state, exert on sector level bargaining. At the same time, it explores the influence that sector level institutions exert at the company level, when social partners negotiate on similar issues. In doing so, it calls attention to the institutions and actors that frame both sector and company level bargaining, shedding light on an area of research hitherto only marginally explored.

It is argued that negotiations at company level are further evidence of the link between collective bargaining and issues of flexibility and security. If policy frameworks at sector level set guidelines and provide incentives towards economic and social targets, it is nevertheless at the company level that the employment relationship is found and many of the

policies implemented. Significantly, Pulignano and Keune (2015:3) demonstrate that it is at the company level that decisions involving many issues at the core of the flexicurity debate are made: ‘whether to train workers and in what skills; to hire and fire and to use open-ended or flexible contracts; to rotate personnel; to use a variable pay-system; to make use of flexible working-time schedule’. Given this, it is important to investigate whether company level actors may exert a similar role. First and foremost, companies can be seen as a space in which actors engage in ‘institutional entrepreneurship’ and ‘recombinant governance’ and where the agenda of managers and employees’ representatives is influenced by their bargaining power and their ability/willingness to find a common ground for compromising (Crouch, 2005; Pulignano and Keune, 2015).

Thus, by investigating company level institutions within their national and sectoral level frameworks across two different countries, the primary aim of this study is to shed further light on the links between flexibility, security and collective bargaining. In particular, the intent is to explore the implications of Marginson and Galetto’s findings (2015) on the coordinating role of sector level institutional arrangements for company level bargaining. In addition, this analysis goes beyond firm level institutions to encompass actors. In so doing, it offers a more thorough account of the choices behind the variety of combinations of flexibility and security achieved through collective bargaining in different national contexts. Moreover, drawing on Pulignano and Keune’s research over flexicurity practices within multinationals (2015), this study focuses on the role that structural variables – in particular, the structure of production and the level of market competition – exerton firm level decision- making over flexibility and security. Specifically, Pulignano et al. suggest that the interplay between production structures and micro-level institutional arrangements shape the extent of social partners’ autonomy and their capability to leverage local resources (2015). However, although sharing a similar purpose – that is to complement the macro-institutional perspective dominating the flexicurity literature with a micro-institutional perspective – Pulignano and colleagues (2015) focus empirically on the metalworking sector, while the present analysis is set within the chemical and pharmaceutical sector. Further, in Pulignano and colleagues’ work (2015) the role of the institutional framework provided by the sector level agreement is only marginally assessed. In contrast, this study investigates the link between sector level and company level institutions and explores the implications of such a relationship in terms of flexibility and security trade-offs.

Finally, engaging in the observation of how actors and institutions within companies introduce diversities in the ways in which items of flexibility and security are balanced-out, this research covers another key-focus of both comparative institutional analysis and flexicurity literature: multinationals (Arrowsmith and Marginson, 2006; Edwards, 2011; Pulignano and Keune, 2015).